A severe drop in the value of a nation's currency usually results in:
A) high inflation.
B) low unemployment.
C) enhanced ability to pay foreign debts.
D) rising imports.

Question

Quizplus · Accepted Answer

A severe drop in the value of a nation's currency usually results in high inflation. This happens because as the value of the currency drops, the price of imports increases. This, in turn, leads to an increase in the prices of goods and services within the country, leading to inflation.

A Severe Drop in the Value of a Nation's Currency